I am in favor of allowing countries much greater latitude in the conduct of industrial policies. When they succeed, this is good not only for the countries themselves but also for other nations because it enables economic growth and hence, greater trade opportunities. When they fail, the costs are borne primarily by domestic consumers and taxpayers. I think the case for international rules and disciplines to limit the use of industrial policies is a lot weaker than people realize.

This kind of dependency would be tantamount to a new kind of colonialism.

We can see small examples of new geopolitical relationships emerging. In March, Zimbabwe’s government signed a strategic cooperation framework agreement with a Guangzhou-based startup, CloudWalk Technology for a large-scale facial recognition program where Zimbabwe will export a database of their citizens’ faces to China, allowing CloudWalk to improve their underlying algorithms with more data and Zimbabwe to get access to CloudWalk’s computer vision technology. This is part of the much broader Belt and Road initiative of the Chinese Government.

The tree which bears the fruit is of greater value than the fruit itself.... The prosperity of a nation is not ... greater in the proportion in which it has amassed more wealth (ie, values of exchange), but in the proportion in which it has more developed its powers of production.

What were the big push policies? Before turning to the main results, I show that the HCI relied heavily on capital subsidies and exemptions from import tariffs, rather than explicitly protecting output markets. My estimates show that this policy packed a punch – on average, treated industries accumulated nearly twice the value of capital than other manufacturing industries. Contrary to popular wisdom, I find no significant difference in the output tariffs across treated and non-treated industries.

All the above shows strong and broad support for reviatilizing American manufacturing. And this support exists despite virtually no discussion of these issues in the Versailles media. The political potential for a pro-active manufacturing agenda is huge. The example of Germany shows how much there is to be gained economically. We call ourselves the "reality-based community". Will we live up to our name?